2 The fourteenth Asian Regional meeting of the ILO recently organized in Busan, Republic of South Korea (August 29th September 1 st ) endorsed an Asian Decent Work Decade ( ), during which concentrated and sustained efforts will be developed in order to progressively realize decent work for all in all countries. During the proceedings, social protection was explicitly mentioned as a vital component of Decent Work by a number of speakers including the employers and workers representatives. The need to roll out social security to workers and their families in the informal economy, to migrant workers and to non regular workers in the formal economy was also perceived as a major national social policy objective. The need to enter into a more intensive dialogue with respect to the design and financing of national social security systems to equip them to cope with the new requirements and challenges of a global economy also emerged as a major outcome of the meeting. The challenge of providing social security benefits to each and every citizen has already been taken up in India. In 2004, the United Progressive Alliance (UPA) Government pledged in its National Common Minimum Programme (NCMP) to ensure, through social security, health insurance and other schemes the welfare and well-being of all workers, and most particularly those operating in the informal economy who now account for 94 per cent of the workforce. In line with this commitment, several new initiatives were taken both at the Central and at the state level, focusing mainly on the promotion of new health insurance mechanisms, considered as the pressing need of the day. At the same time, and given the huge social protection gap and the pressing demand from all excluded groups, health micro-insurance schemes driven by a wide diversity of actors have proliferated across all India. While a wide diversity of insurance products has already been made available to the poor, health insurance is still found lagging behind in terms of overall coverage and scope of benefits, resulting in the fact that access to quality health care remains a distant dream for many. Given this context, the ILO s strategy was to develop an active advocacy role aiming at facilitating the design and implementation of the most appropriate health protection extension strategies and programmes. Since any efficient advocacy role has to rely on practical evidence, the ILO first engaged a wide knowledge development process, aiming at identifying and documenting the most innovative approaches that could contribute to the progressive extension of health protection to all. One such innovative and promising approach is the first attempt of providing a health insurance cover to senior citizens developed by the Municipality of Indore, Madhya Pradesh. BACKGROUND The Municipality of Indore wished to provide health protection to its senior citizens, who constitute a very vulnerable group of the population, both financially and for psychological reasons. The Municipality approached several insurance companies to discuss the possibilities to design a tailor-made health insurance product allowing this group to avail, without any financial barrier, comprehensive hospitalization benefits up to an appropriate maximum level. New India Assurance Company (NIAC) decided to take up that challenge and appointed a Thtor (TPA) to take the full responsibility of designing and managing this new insurance scheme. The main objective for the TPA was to design a very first model of health insurance that would allow the whole population belonging to this age group to access quality health care services in time of need. Since this target group was considered to be more likely to meet far higher health expenditure levels, this model had to avoid any wastage and to get the best value for money, keeping all related costs at an affordable level This called for a closer partnership with all health providers associated with the scheme combined with effective monitoring mechanisms. Once fully developed, this model could be replicated with other Municipal Corporations within the state of Madhya Pradesh as well as in other states. 2

3 TARGET POPULATION Indore, with a population of over 1.8 million is the largest city in the state of Madhya Pradesh. At the present rate of 4.5% per year, the population growth has already stretched the facilities in government run health institutions to the limits thereby leading policy makers to explore new partnership avenues to deliver health care services. Realizing that rapid population growth would create a major bottleneck, the Indore Municipal Corporation (IMC) also focused its efforts to strengthen its revenue base. According to the Mayor of Indore City, computerization, database creation and simplification of tax-related procedures have helped the IMC to increase its revenues by almost 150% in four years, from to (USAID Report). ORGANIZATION The scheme is presently organized in the following manner:. Municipal Corporation New India Assurance Company Network of Private Hospitals Network Hospitals 3

4 THE INSURANCE PLAN Eligibility All senior citizens belonging to the age group of 60 to 80 years on the date of enrolment are eligible to be covered by the scheme. There is no waiting period i.e. every disease/illness is covered from day One. Exclusions The scheme offers a comprehensive health protection which extends to pre-existing illnesses, only barring OPD facility and HIV related illnesses. Plan Benefits The scheme covers all hospitalization expenses incurred by the insured, up to a total amount of Rs. 20,000 per year. Pre-hospitalization expenses for seven days are also covered provided that healthcare services are being provided by network hospitals. All hospitals provide cashless services to members. Prior clearance has to be provided by the TPA to avail the various services covered under the scheme. Premium Rate Premium fully paid by IMC Premium has declined over the years: from Rs 625 in Year I to Rs 500 in Year II and Rs 475 in Year III Plan Distribution The plan promotion and distribution is organized through IMC offices with support of various civil society organisations; Service Delivery The scheme relies on the following mechanisms: Comprehensive hospitals/nursing homes mapping and analysis carried out by the TPA Detailed contracting agreement formats developed by the TPA Network of 14 private hospitals associated with the scheme Expert on geriatric care called for support and advise and doubling up on helpdesk and 24H helpline /7 days Managed health care and close monitoring mechanisms developed by the TPA Database including classification of diseases and full cost breakdown. General Overview Starting date April 2003 Ownership profile Local Government Target group Senior citizens (60 to 80 years old) Outreach Indore city Intervention area Urban Risks covered Single risk: Health Premium Rs 0 Insured/Year Co-contribution Rs 475 (IMC) Total premium Rs 475 No of insured 49,419 Percentage of women 55% Operational Mechanisms Type of scheme Partner-agent Insurance company Public Insurance Co. Insurance year April 1 st March 31 st Insured unit Individual Type of enrolment Voluntary One-time enrolment None fee Premium payment Yearly upfront Easy payment Fully paid by IMC mechanisms Scope of Health Benefits Tertiary health care Hospitalization Deliveries No Access to medicines No Primary health care No Level of Health Benefits Hospitalization exp. Up to Rs 20,000 Pre-hospitalization Covered for 7 days Service Delivery Health prevent./educ. No Programmes Prior health check-up No Tie-up with H.P. Yes Type of health prov. Private Type of agreement Formal agreement No of associated HP 14 TPA intervention Yes Access to health care services Pre-authorization required Co-payment: Rs 500 HC payment modality Pure cashless 4

5 Administration The insurance plan is administered by MD India Health Private Limited. MD India was one of the first Third Party Administrators to be licensed under IRDA (Insurance Regulatory and Development Authority) regulations and one of the largest operating country-wide with in-depth experience in the administration of health insurance schemes. Under contractual arrangements, MD India checks the eligibility of health facilities, manages the relations with associated hospitals and processes all claims. MAIN ACHIEVEMENTS Coverage The scheme was highly successful in spreading the word to entice a larger membership. Over the last two years the number of insured increased by 125% and 79% respectively. In Year III, the scheme succeeded to reach its enrolment target which was set at 50,000 Y 1 Y 2 Y 3 N Insured 12,222 27,543 49, Number of Insured Year 1 Year 2 Year 3 Services Provided The scheme provided benefits to 3,990 people over a three-year period. The average benefit provided stands currently at Rs. 6,972 per treatment. This average amount is about 15 time higher than the premium value as set in Year III. The total value of claims settled amounted to some Rs 28 million. Y 1 Y 2 Y 3 N Surg. Int ,440 1, Number of Hospitalization Cases Year 1 Year 2 Year 3 Administration Costs Administrative costs have been kept at a low level over the three-year period. Administrative costs per insured kept on declining over the three-year period to come to some Rs. 27 per insured in Year III. Y 1 Y 2 Y 3 X 1000 Total Admin. Costs ,345 N of Insured 12,222 27,543 49,419 Adm. Cost/Insured Administration Costs per Insured (Rs) Year 1 Year 2 Year 3 5

6 Comparative Advantages On February 27, 2007, the Minister of Finance referred to a new exclusive health insurance scheme for senior citizens offered by the National Insurance Company. Having urged the other public insurance companies to follow suit, he mentioned that they had already agreed, planning to launch their initiatives the same year. The following compares the main features of the two schemes already made available to senior citizens: Varishta Mediclaim for Senior Citizens Health Insurance Scheme for Senior Citizens Insurance Company National Insurance Co. (Public) United India Insurance Co. (Public) Partner Organization Government of India Municipal Corporation of Indore (IMC) Partnership experience 0 4 years Target group Belonging to the age group years Belonging to the age group years Risks Covered Hospitalization expenses Hospitalization Expenses Domiciliary hospitalization exp. Scope of intervention National Municipality of Indore Number of Insured? 49,000 Premium Hospitalization expenses: years: Rs 4, years: Rs 5, years: Rs 5, years: Rs 6,890 Critical illness: years: Rs 2, years: Rs 2, years: Rs 2, years: Rs 2,288 Rs 475 (Has decreased over time: was Rs Rs 600 in Year I and Rs 500 in Year II) Service tax To be paid separately by GoI Included in above Administration costs All costs included in above All costs included in the above Premium for new 10 % added to above premium Same as above (Gwalior) entrants Premium distribution Rs 800 paid by GoI Rs 475 fully paid by IMC Rs 200 paid by worker Health benefits description Hospitalization expenses: Up to Rs 20,000 Hospitalization expenses: Up to Rs 15,000 on a family floater basis, within following limits: Pre-exist & new dis: Rs 15,000 Dental treatment: Rs 250 Eye treatment: Rs 75 Spectacles: Rs 250 Domiciliary hospital.: Rs 4,000 Ayyurvedic/Homeop.: Rs 4,000 Pre and post hospit: Rs 15,000 Baby coverage: Rs 500 OPD: Rs 7,500 Limit per illness: Rs 7,500 Co-payment 10 % Flat amount: Rs 500 Health service payment Cashless or reimbursement Pure cashless Reimburement modality Within 7 days Within 7 days Other remarks: Already replicated with the Municipality of Gwalior 6

7 CHALLENGES The insurance plan has still to address the following key challenges: Increase plan benefits; Improve accreditation and package rate standardization; Design a separate mechanism allowing senior citizens to avoid losing all health benefits once reaching 80 Develop a full model that can be easily replicated in similar urban settings in other States. THE LINKAGE EXPERIENCE Developing efficient partnership arrangements is already seen as a key element for the successful implementation of any health insurance scheme targeting the disadvantaged groups. Evidence also suggests that building efficient linkages between community-based initiatives and government programmes in order to exploit their respective strengths is another major requirement. This necessary synergy may be developed at various levels. Scope of Linkages Financing: Operations: Service Delivery: Governance: Policy Planning: Financing: Legal Framework: 1. Financing The Municipality of Indore deserves all the credit for having been the very first to organize a health insurance scheme to cater for the needs of the senior citizens considered to be a vulnerable community more likely to meet far higher health expenditure levels than others. The exemplar partnership developed with a Third Party Administrator and a public sector insurance company allowed for the scheme to evolve over time into a replicable model, reflecting all the improvements brought about through effective contractual arrangements with a network of private health providers. From the outset, the Municipality of Indore committed itself to support the scheme, being wise enough to allocate its financial support where it ought to go: as a payment of the premium to be paid. The Municipality decided to pay for the full premium, making the coverage cost-free for each policyholder. Over the last three-year period, this contribution amounted to a total of about Rs 45 million. The co-payment of Rs. 500 to be paid by the member each time he/she gets admitted in a network hospital is paid into a corpus maintained by the corporation, which in turn is used by the Municipality towards the next year premium. 2. Operations The Municipality Corporation organizes through its agents the promotion campaign aiming to enroll the senior citizens into the scheme. MD India is also contributing to these campaigns through direct contacts with the various associations/ngos working within the communities. The potential members are provided with enrolment forms by the IMC. The enrolment forms along with a list of total members to be enrolled are forwarded to MD India by Indore Municipal Corporation. After the members are duly enrolled, the MD India Identity Card along with a Guidebook and hospital list is given to Indore Municipal Corporation who in turn forwards this to the respective members. The Third Party Administrator has put in place a state-of-the-art Management Information System through which all invoices and justification papers sent at the end of each month by health providers is processed. MD India uses an advance deposit made by the Insurance Company to check, register and 7

8 settle the claims in a matter of days. On a regular basis, detailed statistics on members enrolled, claims submitted and cleared are provided to the Corporation. 3. Service Delivery Although the scheme has no tie-up with public health providers yet, it could organize and maintain over the years a city-wide network of private health providers already regrouping 14 health facilities. It also succeeded ensuring the adoption of standardized reduced tariffs on all interventions and the application of stringent procedures for the registration, treatment and discharge of patients covered under the scheme. 4. Governance Being both owner and financer of the scheme, the Municipality of Indore is directly responsible for any decision pertaining to the functioning of the scheme. Through the direct implication of its staff when distributing the insurance plan, the scheme is known as a local Government initiative, which generates more credibility and trust among the poor senior citizens community. 5. Policy Planning The scheme has already generated a wide interest among other Municipalities as well as at the Central Government level. In 2006, the Municipality of Gwalior requested the assistance of MD India to initiate a similar scheme. In his Speech to the Nation on the Budget, on February 28 th, the Minister of Finance also announced that he had asked all public sector insurance companies to offer health insurance products to senior citizens. 6. Legal Framework The scheme falls under the partner-agent model as described by the Micro-insurance Regulations issued in November 2005 by the Insurance Regulatory and Development Authority (IRDA) of India. It is therefore under regulation of the IRDA and would be considered as fulfilling New India Insurance Company s obligations to the social sector. CONCLUSION The scheme developed by the Municipality of Indore bears witness to the effectiveness of public-private partnership in health, where each actor may play its part to the full extent without any interference. Although having to rely at first on a lot of guesswork, the scheme succeeded in evolving into a real model providing cost-effective health care services. When designing a new health initiative, the IMC scheme also offers a fine example of the ultimate goal to keep in mind throughout the whole exercise: ensuring access to quality services through managed health care and constant interaction with a network of health providers. To learn more, contact: Mr. Anupam Gupta, Chief Operating Officer, MDIndia Healthcare Services, Ltd MDIndia House, S. N 147/8 Karve Statue Circle, Kot hrud, Pune E.mail: : (91-020)

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